Cable Companies, Why Don't You Like Technology?

As lots of Fools know, I find cable companies to be solid entities that have escaped from the clutches of telephone and satellite competition. At the same time, their managements seem much like my children at times: headstrong and sometimes unwilling to face reality.

I'm sure you're familiar with these cable operators. Look at your own cable box. Chances are you're one of the millions who subscribe to a major cable provider like Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), Cablevision (NYSE:CVC), and Charter (NASDAQ:CHTR). These companies have tremendous franchises that allow them to grow their shareholder bases for years to come. What I don't understand is why they almost seem determined to surrender any advantage to telephone companies AT&T (NYSE:T) and Verizon (NYSE:VZ).

I'm talking about the excruciatingly slow pace at which cable operators roll out new technology. They've devoted most of the past half-dozen years to perfecting and beginning the deployments of their triple-play packages of video, data, and telephone service. Meanwhile, the high-potential video-on-demand functionality has essentially been given only a lick and a promise; interactivity features have been technologically ready for years but remain almost completely unavailable to subscribers, depending on where they live.

The same can be seen with the joint venture between Sprint Nextel (NYSE:S) and cable companies Comcast, Time Warner Cable, Cox, and Advance/Newhouse. According to BusinessWeek, the venture's wireless product, Pivot, is being dribbled out to cable subscribers at best. And while the current triple play has customers flocking to cable -- albeit at a somewhat reduced rate -- any prolonged competition with the telecoms will further dissipate cable's advantage.

The triple-play packages that cable companies have been focusing on are slowly becoming obsolete next to telecom companies that offer the same features plus wireless services. Who doesn't like a one-stop entertainment shop? Indeed, while a triple play is all that baseball will allow, it's likely that another spectrum will be necessary to prevail or even stay competitive in the broadband game. It's not an even playing field now, but the broadband game that cable used to dominate could indeed change hands.

So stay tuned, Fools. While the cable operators are still ahead of their telephone foes, their legendary and excessively deliberate deployment of new services could seriously shrink their lead. In fact, if we watch, I'll bet when they hit the later innings, we'll notice that that lead has begun to shrink.

For related Foolishness:

• The Chatter About Charter
• OpenTV Just Hanging On
• Comcast at the Movies

Surf through a free 30-day trial of our Stock Advisor newsletter service. This newsletter, outperforming the S&P 500 by more than 36 percentage points, includes the companies that Tom and David Gardner believe in.

Fool contributor David Lee Smith owns more television sets than he'd care to admit, but has no shares in the companies mentioned. The Motley Fool has a disclosure policy.